GOP opposition threatens auto bailout

A House-passed bill to speed $14 billion in loans to Detroit’s automakers stands on shaky ground in a bailout-weary Congress, undermined by Republican opposition that could derail the emergency aid in the Senate.

Republicans are challenging lame-duck President George W. Bush on the proposal, arguing that any support for the domestic auto industry should carry significant concessions from autoworkers and creditors and reject tougher environmental rules imposed by House Democrats.

The House approved the plan late Wednesday on a vote of 237-170. It would infuse money within days into cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough cash to make it through 2009, would also be eligible for federal aid.

Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks, and concerns that a carmaker collapse would erase tens of thousands of jobs and jolt an already bleak economy.

Democrats and the Bush White House hoped the Senate would vote on the legislation as early as Thursday. But based on concerns raised by GOP senators — and a still-uncertain level of support even among Democrats — they had a lot of work to do.

A leading Senate Republican opponent said Thursday that he cannot back spending $14 billion of taxpayer money on a plan that would call for a restructuring of the industry, but which fails to detail just how that would be accomplished.

"I think that is putting the cart before the horse and isn’t reponsible in terms of tax dollars," Sen. David Vitter of Louisiana said on CBS’s "The Early Show."

The measure’s murky outlook reflected the difficulty of approving another federal financial rescue on the heels of the deeply unpopular, $700 billion Wall Street bailout, as the clock ticks down on the current Congress and Bush’s influence is at a low ebb.

"People realize that this bill is an incredibly weak bill (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Sen. Bob Corker, R-Tenn.

Even Republicans representing states with automobile plants said the proposal was far from ideal. Sen. Kit Bond, R-Mo., whose state is home to five auto plants, said he wanted to see changes. Sen. George Voinovich, R-Ohio, said the bill lacked the necessary Republicans to pass the Senate.

The measure would create a government "car czar," to be named by Bush to issue the loans, empowered with the ability to yank back the loans and force the carmakers into bankruptcy next spring if they fail to cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Opposition wasn’t limited to Republicans.

Democratic Sen. Max Baucus of Montana is opposing the measure because of a provision to bail out transit agencies that were involved in transactions now considered unlawful tax shelters.

Under the House-passed bill, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The automakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the Big Three, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

Democrats agreed to scrap language — which the White House had declared a deal-breaker — that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states. But they kept a provision to force the automakers to abide by those states’ limits — a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.

Senate Democrats unveiled a nearly identical measure that omitted the requirement, but that bill still faced long odds.

The Bush administration is expected to work with President-elect Barack Obama’s team on choosing the industry czar. The overseer would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more.

The measure also would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the $700 billion Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.

Also included in the bill is an unrelated pay raise for federal judges.

Share this:

Comments

In a period of two weeks about a week and a half ago, five auto parts factories in Virginia closed in every area of this state. Others have been forced to lay off large numbers of employees to keep from shutting down. We have one automobile dealer in town closing that’s been in business for 40 years; another that’s been in business for about that time that’s in serious trouble. This affects every single business that provides goods and services to the employees in those factories: diners, restaurants, grocers, stores, you name it, who depend on the employees’ business to survive. For the Republicans to block this legislation is not only irresponsible, it it unconscienable.

One thing that’s bothered me throughout this whole discussion: in this area, people who REPAIR cars make $70 an hour. Shouldn’t the people who build them make as much as the people who fix them? I’d feel better driving off a lot knowing as much care went INTO building the vehicle as did fixing whatever breaks.

The two Alabama senators, Shelby and Sessions, are two of the most backward-thinking US senators. Alabama also has NO US car manufacturers or parts manufacturers: however, the state DOES have several foreign car manufacturers (it’s their largest industry), so they have an almost negative vested interest in this legislation. The other irony here in relation to these two high minded public servants is that the state of Alabama has given more money in concessions to those manufacturers (Does BMW truly need that much money?) to build their factories and locate there, including tax incentives, etc., than the Detroit manufacturers are asking for. Alabama is one of the poorest states in this country. These two men have more than a lot of nerve portraying themselves as defenders of the United States taxpayer, when they are nothing of the sort.

There’s a definite double standard when it comes to main street and Wall Street. Yes, we needed a bail out for the financial market, even though they brought it on themselves with greed, bad investments, and shennanigans that deserved punishment, not reward. Our Treasury Secretary has been A.W.O.L. when it comes to overseeing how those thugs use their highjacked funds: they were supposed to use it to support main street, businesses, making loans, etc, but instead they’ve distributed it to their boards, their stockholders, and their CEOs. We need companies who build things, like automobiles, but Detroit’s been treated as the ugly stepsister. There is no justification for it, particularly when the same Republicans who are attempting to throw a monkey wrench in rescuing the auto makers are the same people who did away with the cafe standards in the first place, enabling them to build the very cars that these senators are using as the prime examples of why they should not survive. In doing Big Oil’s bidding, they might have sealed Detroit’s fate, and the blame would largely rest on their shoulders as well. You would think the shame and guilt alone would make them do the right thing, however, these men have no such human parts to their makeup.

If US automakers go down, they’ll take the rest of the economy with them. Republicans like to float the idea of a Chapter 11 bankrupcy; however, they show their usual lack of understanding of the average American, who won’t buy a car from automakers who are in bankrupcy, and who may not be able to uphold manufacturer’s agreements. They also overlook the fact that banks aren’t loaning money, and undoubtedly won’t loan money to Detroit. In other words: they’d let them fail, and take the rest of us with them.

Saving The Buggy Whip Makers
One more ridiculous Bush fantasy based upon Lies Lies Lies Lies Lies and more Lies.
Everybody is lying.
All the “experts” are saying: “This too shall pass.”
It won’t. It can’t. There isn’t any money. There never was any money.
The moneylenders simply made it all up. The money and the security.
The simple truth is: GM Corp, Chrysler Corp and Ford Corp DO NOT MAKE CARS.
Never in history has one of these bloated mismanaged corporations ever made a car.
They are not Carmakers, they are simply moneymakers. They do not make anything other than money.
And they do not make their money by making cars.
They are not car makers, they are defacto BANKS — and they make their money the same way all banks do – not by producing anything, but by BORROWING MONEY AND LENDING MONEY.
The cars are made by their subsidiary companies, contractors and employees, providing the corporations with enormous cashflow that is in turn lent yet again – and again and again and again.
The corporations borrow money at low interest – by selling stocks, raising debentures, issuing bonds and borrowing from other banks. They lend the borrowed money at high interest to their subsidiaries and to their contractors and to their consumers, making profits in the process.
The enormous cash flow from multiple sources ebbs and flows. From time to time, there is some potentially idle money lying around – for a few seconds – then it is out in the short-term money market earning interest.
Sometimes this money is used to buy “securities” that look attractive and reasonably liquid – backed by, say, home mortgages. Maybe bundled securities.
The reason these corporations are in trouble is not their fifty years of gross stupidity in car design and manufacture.
The reason is that right now, these banks (aka corporations) cannot borrow money. Nothing whatsoever to do with making cars.
They cannot borrow money because there isn’t any money.
There never was any money.
The so-called “legal,” “licensed,” “authorised,” “regulated” whatever banks were allowed even pre-Dubya to lend ten times their capital.
Bush, Cheney, Wolfowitz (now comically running World Bank) and the rest of the Deregulators held this to be unnecessary restraint and allowed them to lend any amount of money they cared to lend, regardless of their capitalization or legitimate borrowing capacity.
Money lender executives like Hank Paulson cheered enthusiastically and made many millions.
So they lent many times all the so-called “money” in existence – on security that was as non-existent as the money.
Non-bank money-lenders were way outside of the “regulated” system and borrowed and lent as they wished, making up paper securites to suit.
Saving the flatulent, ridiculous anachronistic, nepotistic, feudal money-lending fiefs that own auto manufacturer subsidiaries will not long term save one of their subsidiaries or contractor companies or one employee job. What it will do, all it will do, is save GM Bank, Ford Bank, Chrysler Bank and their greedy incompetent management.
The obvious alternative is to liquidate the corporations/banks by whatever means fits – and rescue intact the subsidiary companies and their line managements that actually do make cars.
These real carmakers can then be sensibly restructured under competent carmaker (not moneylender) management, and there just might be some future for American auto manufacture.
Cashel Boylo